The Bombay High Court rejected the plea of the public sector commodities trading firm MMTC pledging injunction for restraining Financial Technologies from using the proceeds of the sale of Singapore Mercantile Exchange (SMX).
In a case filed for the recovery of Rs 228 crore invested by MMTC in the beleaguered National Spot Exchange Ltd (NSEL), the public sector company sought injunctions from the Bombay High Court over two weeks ago. For the recovery of its amount MMTC sought the attachment of SMX sale proceeds which NSEL promoter Financial Technologies (FTIL) sold to Intercontinental Exchange (ICE) of United States at $150 million in November.
After hearing arguments from all concerned including the counsels of MMTC, FTIL (along with its promoter Jignesh Shah) and NSEL, the Court instructed FTIL to give a three-week notice to MMTC, if it decides to dispose of its headquarters (FT Towers), based in Mumbai. Subsequently, MMTC would have the right to challenge the sale of the same immovable property by approaching the HC, the interim order said.
MMTC had also sought the attachment of all FTIL’s and Jignesh Shah’s assets reasoning that it was seeking security for amounts far greater than its own exposure, as failure to satisfy to meet the claims of other investors would result in the investors seeking pro-rata allotment of assets securing the exposure of MMTC.
The Court dismissed the arguments made by MMTC maintaining that it would be secured to the extent of its exposure.
Meanwhile, FTIL had been planning to utilise the proceeds for settling external commercial borrowing (ECB) dues. Shah has been directed to inform MMTC once the attached properties are released.
Also, the court ordered La Fin - holding company for FTIL - to give a three weeks notice to MMTC should it decide to dispose of its shareholding in FTIL. La Fin’s shareholding in FTIL has been attached by the Economic Offences Wing (EOW) of the Mumbai Police.
In an associated development, MMTC could soon face heat from investigating agencies. Sources within the EOW confirmed that the scope of investigation will widen to include MMTC’s investments into the exchange.
Senior EOW officials confirmed that they would write to the central investigation agency Central Bureau of Investigation (CBI) to investigate compliance with due diligence norms, prior to MMTC’s investments into NSEL and the role of the regulator the Forward Markets Commission (FMC) in the Rs 5574 crore NSEL payment crisis case.
Since, the first information report (FIR) has been not lodged, investigation about the role of MMTC and FMC falls beyond its jurisdiction, said an EOW official.
